The discussion of EFN in the chapter implicitly assumed that the company was operating

at full capacity. Often, this is not the case. Assume that Rosengarten was operating at $90$

percent capacity. Full$-$capacity sales would be $$1,\frac{000}{90}=$$$1,111.$ The balance sheet

shows $$1,800$ in fixed assets. The capital intensity ratio for the company is:

Capital intensity ratio $=$ Fixed assets$/$Full$-$capacity sales $=$$$1,\frac{800}{\text{\$}}1,111=1\mathrm{.}62$

This means that Rosengarten needs $$1\mathrm{.}62$ in fixed assets for every dollar in sales when it

reaches full capacity. At the projected sales level of $$1,250,$ it needs $$1,2501\mathrm{.}62=$

$$2,025$ in fixed assets, which is $$225$ lower than our projection of $$2,250$ in fixed assets.

So$,$ EFN is $$565-225=$$$340.$

Blue Sky Manufacturing, Incorporated, is currently operating at $90$ percent of fixed asset

capacity. Current sales are $$747,000.$ How much can sales increase before any new

fixed assets are needed? $($Do not round intermediate calculations and round your

answer to the nearest whole number, e$.$g$.,32.)$